As elections loom, government clears 7th Pay Commission

The recommendations of the sixth pay commission headed by justice B.N. Srikrishna were implemented with effect from 1 January 2006. Photo: Pradeep Gaur/Mint

Updated: Wed, Sep 25 2013. 11 57 PM IST

New Delhi: Ahead of the election season, the government approved a proposal to constitute the 7th Central Pay Commission to revise the salary structure of Union government employees from both civil and military services.

In a statement on Wednesday, the finance ministry said the average time taken by a Pay Commission to submit its recommendations is about two years, and accordingly the next set of recommendations is likely to be implemented from 1 January 2016.

The chairperson and members as well as the terms of reference of the Pay Commission will be finalized and announced shortly after consultation with major stakeholders, the ministry said.

N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy, said the government might have announced the setting up of the Pay Commission slightly early because of the impending elections in five states and the general election next year. Notifications for assembly elections in Delhi, Rajasthan, Chhattisgarh, Madhya Pradesh and Mizoram are expected to be announced soon. The general election is due in May next year.

Bhanumurthy said states that followed the previous Pay Commission’s recommendations were better placedin 2008 to increase salariesand allowances of their employees.

“The impact of the 7th Pay Commission on the fiscal situation of the central and state governments will depend on the extent of hike it recommends and also the fiscal devolution package to be announced by the 14th Finance Commission of India,” he added.

The 14th Finance Commission chaired by Y.V. Reddy, constituted in January, is expected to submit its report by October 2014 covering for a period of five years starting April 2015.

The 1st Pay Commission was established in 1956, and since then the Union government usually appoints a Pay Commission once in a decade to revise the wages of Union government employees.

The 6th Pay Commission headed by justice B.N. Srikrishna was constituted on 5 October 2006. It submitted its report on 24 March 2008, but its recommendations were implemented retrospectively from 1 January 2006.

The government accepted most of the recommendations of the 6th Pay Commission with some modification.

But it rejected a few recommendations such as a liberal severance package for employees who want to leave service without pension with 15-20 years of service left, another one that said government employees should have only three holidays in a year, and a suggestion for flexible work hours for women and flexi-weeks for employees with disabilities.

The government also deferred some recommendations to review them separately, such as bonus and overtime allowance, recommendation of lateral shift of defence personnel to central paramilitary forces, corporatization of Indian Railways, and abolition of Indian Telecom Services and Telecom Commission.